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Six months later, automotive franchises remain strong in the face of industry-wide struggles

As the difficulties in the US automotive industry persist, last June’s exclusive franchise study by Franchise Direct on the automotive franchise sector has become even more relevant. Despite Washington’s efforts to restructure Detroit’s auto manufacturers, car sales continue to stutter as drivers turn to aftermarket franchises to keep their cars running.

Earlier this year, Franchise Direct relesed a report examining the Franchise Disclosure Documents (FDDs) of 30 automotive franchises. This was when the US economy was still in recession and just after President Obama’s government invested in a major stake in Chrysler and GM.

Despite billions of investment from the US Government, the endemic problems in Detroit persist. General Motors emerged from bankruptcy this year, but the recent resignation of their CEO indicates severe internal strains. For the first time, GM sales have fallen by 20%, having dipped to 32% so far this year. There is also great uncertainty about the future viability of the Swedish carmaker Saab, which it owns. In all, American car sales are at the lowest rate since World War II, a depressing statistic for car dealers but a promising sign for entrepreneurs.

This is supported by the Franchise Direct automotive franchise report. Projected new car sales for 2009 are 9.7 million units, a 40% decline since 2007. America’s love affair with the automobile is undiminished, even if Americans can no longer afford to buy new cars as often. Therefore, more drivers are turning to automotive franchises to get more miles out of their vehicle.

Aftermarket automotive franchises are clearly profiting from this trend. Used car and rental franchises also stand to succeed. With President Obama promising stricter carbon emission laws, it is also an exciting time for green automotive franchises, as they will clearly be essential in the future.

It is a bitter irony for Detroit that the problems that plague it are creating the path for success of automotive franchises. Franchise Direct’s original research shows that consumers are relying on automotive franchises to keep their cars on the road. As the American auto industry continues to suffer, Franchise Direct still believes that there are great franchise opportunities in the automotive sector.

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